Plan for your retirement with regular savings that take advantage of deferred taxes and employer contributions, states CNN Money. You need to ensure that the returns beat inflation and avoid touching your retirement funds until your actually retire, advises the Department of Labor.Know More
Start saving early and aim for 70 to 90 percent of pre-retirement income to ensure a financially independent retirement, states the Department of Labor. You need to understand the various types of retirement savings available in order choose the best options, according to the IRS. A 401(k) account offers great returns as the employer matches your contribution and the growth in savings is tax deferred, points out CNN Money.
Even young adults in their twenties should start saving for retirement if they have started working full time, suggests BankRate. This allows for a person to benefit from the advantage of compounding. When estimating the income needed for retirement, the SSA asks that you take into account retirement age, life expectancy, medical coverage and social security benefits. Planning for retirement also requires you to diversify your portfolio and ensure that the returns on your investment are greater than the inflation rate. This typically involves at least some investment in stocks.Learn more about Financial Planning
An individual can withdraw the entire 401(k) balance in a lump-sum distribution immediately after retirement, says CNN Money. Other options include rolling the money into an Individual Retirement Account (IRA), purchasing an annuity or asking for periodic disbursements.Full Answer >
Withdrawals can be made early from a 457(b) plan before being paid out in full in retirement under a few certain conditions, according to CNN Money. However, taxes are owed on any withdrawals.Full Answer >
Holders of traditional IRA accounts have to pay regular income taxes on distributions after age 59 1/2, reports CNN Money. Holders of Roth IRA accounts do not pay taxes on distributions.Full Answer >
Investopedia defines a 401(k) as a savings plan offered by employers that allows an employee to make contributions from his salary either on a pre-tax basis or a post-tax basis, sometimes both. The employer also makes a contribution to an employee's 401(k) plan that matches the original contribution or is a non-elective contribution. Some plans also include a profit-sharing feature.Full Answer >